HP Enterprise Services, the business unit formerly known as EDS, signed two five-year pacts with US Airways for applications management and data center hosting services.

The agreements are renewals and HP “will continue to play a key part in synchronizing the business operations of US Airways around the airline’s flight-operating system maintenance,” an HP spokeswoman says.

US Airways is a long-time client of HP, which led the integration of the reservations systems of the merged US Airways and America West.

HP Enterprise Services currently is similarly charged with moving United Airlines onto the SHARES platform currently used by Continental Airlines.

Development of a so-called next-generation reservation system, Agilaire, and its kindred system, Jetstream for American Airlines, are also on the HP agenda.

In other news, HP Enterprise Services recently signed and renewed an applications services agreement with Dollar Thrifty.

This comes at an interesting time for the Dallas-based airline, but it’s also an interesting period for the airline industry. At a time when there is a distribution battle going on for the allegiances of intermediary channels, having an advanced res system is essential.

However, is there a suitable legacy model and process for managing airline reservations? Perhaps the time has come to re-think this.

Southwest’s historic disdain for the global distribution sysstems is legendary, although its attitude has softened with participation in some GDSs.  In that regard, the airline is also now getting an attractive proposition from Travelport to participate in its Universal API.

Officially, the reason for the delayed decision about a new res system is Southwest has too much on its plate, the Dallas Business Journal reports. The airline is running hard and fast to integrate AirTran flights into the core reservations process and this places a significant strain on the Southwest IT team’s scarce resources.

So, it is a prudent move to delay a decision. However, since Southwest has known for some time that it would have to integrate AirTran, one can speculate that this may not be the only reason.  The last time Southwest found itself tasked with airline integrations was when it acquired Salt Lake- based Morris Air in 1993 and the assets of Muse/Transtar airlines in the 19980s.

Given recent glitches in the overall IT infrastructure at Southwest, there may be a number of other issues at stake.

CEO Gary Kelly is on record as stating that a new Passenger Service System would provide Southwest with international capabilities, and the airline had reduced its short list to two players — Amadeus and Sabre.

The selection process has been very laborious. That would be natural for “normal” airlines such as the network carriers. But Southwest has carved a different path and grown to be the largest (by passenger numbers) domestic US airline.

The reservations selection process has dragged on for more than a year. That is light years for a company whose agility and speed is legendary.

In the interim, Southwest will be going for a little more “Luv” from Sabre,  which will be doing modest upgrades to Southwest’s res system, including adding some international quick fixes for Mexico and other nearby international locations.

Sabre declined to comment about this work.

There are many major PSS players. Southwest uses a hybrid and customized system. Some of this stems from the old Braniff system (called COWBOY) which Sabre acquired after the collapse of the Dallas-based airline in the 1980s.

As noted earlier, Southwest is evaluating both Amadeus and Sabre’s PSS offerings.

Amadeus Altea was largely built from scratch over the last decade and is still incorporating major pieces of functionality. Amadeus of late has won a large share of the PSS RFPs in the market — a situation that has prompted some calls for the company to separate its two businesses.

Amadeus has two sub versions of its PSS: one for low cost carriers, which Norwegian Air Shuttle is using, and a specialized Atltea version called the Common IT Platform, which was customized for the Star Alliance. Major Altea users in Europe include British Airways, Air France/KLM, and Lufthansa. In Asia/Pacific, the Altea airlines include  Singapore Airlines, Cathay Pacific and Qantas. Some  are in the process of implementation.

However, in North America, Amadeus’ lone customer, United Airlines, cancelled the contract, leaving  Madrid-based Amadeus looking for a North America customer.

Sabre’s PSS is SabreSonic.It was upgraded in recent years and has won over several former low cost carriers migrating to a hybrid model. Recent wins for Sabre include Canada’s WestJet, Mexico’s Volaris and JetBlue in the USA. Sabre will be losing its largest customer, American Airlines, to HP, once American Airlines’ new system, Jetstream, is ready.

Southwest Airlines confronts a dilemma that most airlines now face. Over the past 15 years, the Web has increased the complexity of airline passenger IT infrastructure. The common wisdom was to have a two-tier solution with the PSS handling most major infrastructure and core functionality, and Web-based systems tasked with being the passenger interface.

This two tier model has now morphed into a bus-like structure with common systems for planning and management, business intelligence data services, customer management/loyalty, check in systems and PSS functions sitting on servers inside the airline’s own environment or within that of their outsourced IT providers. The Web-based Internet booking engine  is usually far more sophisticated than just being a front end to these systems.

Indeed it has become more in vogue to invest in these non-PSS systems rather than in the core monolithic PSS mainframe-based systems of old. There are many current demands on scarce IT resources inside airlines. The need for speed of deployment in a climate of rapid change — mobile and social media — have placed further constraints and demands on the IBM TPF (now zTPF)-based mainframes used to host most airline PSSs.

Southwest realizes that with its growth it will be a gut-wrenching process to move to a new res system despite its relatively simplistic model.

But perhaps the days of the monolithic PSS are over.

With distribution fragmenting and the importance of an actively managed multi-channel distribution strategy essential for all carriers, the possibility of transitioning to a more distributed cloud-based solution will probably cause Southwest to rethink its next foray.

One can clearly infer that there was no easy answer for Southwest or they would have made a decision by now. The demands of consumer-based airfare search, with its accompanying increases in traffic, are placing huge strains on every airlines’ IT infrastructure, and it will never diminish.

Other strains include demands for unbundled and ancillary services (yes, even Southwest has those), mobile and social, and all of these requirements should cause all airlines to rethink the old model of massive-scale solutions.

Instead they should be looking at agile environments and the cloud as ways to move to a more commercially sustainable set of IT solutions.

The days of 5-10 year PSS contracts must surely be threatened.

After all, who can say what the airline IT world will be like commercially in 2 years — let alone five or 10.

Perhaps Southwest is making a good decision at the right time.

United Airlines will make a one-time $75 million payment to Amadeus to get out of the contract.

The project had been stalled for years and was killed when United Airlines merged with Continental Airlines and opted to migrate the United’s res system on Apollo to the EDS SHARES system that handles internal reservations for Continental over the next 12 to 18 months.

At a conference call about their first quarter of 2011 financial results today, Amadeus officials said perhaps United, which is part of the Star Alliance, could consider the Altéa platform for the merged airline in the future. In dissolving the contract, the two companies said they will look for ways to continue mutually beneficial partnerships.

Meanwhile, Philippe Chérèque,  executive vice president, commercial, for Amadeus, said the loss of the United migration will not lead to any downsizing of its airline IT efforts in the U.S. market, where it has a number of negotiations under way.

In other news, Luis Maroto, the Amadeus CEO, said the decision by Delta Air Lines to pursue a direct-connect strategy will not alter the Amadeus approach to the U.S. market. Maroto said Amadeus is proposing solutions to U.S. airlines that are more efficient than the current direct-connect approach.

Amadeus also provided an update about its proposed sale of pan-European online travel agency Opodo to Axa Private Equity and Permira Funds. Amadeus submitted a notification form to the European Commission April 18 after two months of cooperation.

Ana de Pro, Amadeus CFO, said the deal could close in the second quarter unless the EC requires a Phase II analysis. In such a scenario, a decison on the transaction could be delayed until the fourth quarter.

Proceeds from the Euro 450 million sale would be used to pay down Amadeus’ debt in conjunction with a refinancing.

That question comes to the fore following yesterday’s announcement that the U.S. Department of Justice Antitrust Division closed the books on its Hart-Scott-Rodino Act review, clearing a path to merger.

Southwest says it expects the merger transaction to close on May 2, 2011, and one of the next steps will be to secure a Federal Aviation Administration single operating certificate, which could happen in the first quarter of 2012.

It will likely take several years after that to merge the two airlines’ fleets and crews, and to figure out how to blend disparate reservations systems.

Meanwhile, on the distribution front, AirTran and Southwest have diametrically opposed views on distribution through online travel agencies.

You can find AirTran flights and schedules on major OTAs such as Expedia.com.

And, Southwest shuns distribution through OTAs and once threatened legal action against Orbitz in the early days of the site when it merely posted the airline’s schedules.

Once the AirTran brand fades away, OTA distribution likely will disappear, as well.

Unless Southwest has a major about-face.

Meanwhile, Southwest will have to sort out reservation system choices for the merged airlines.

Southwest currently is considering transitioning to systems from Sabre or Amadeus to better-accommodate merchandising and international flights, while AirTran’s reservations system vendor is Navitaire.

Henry Harteveldt, Forrester Research’s principal analyst for travel, says Sabre, headquartered in the Dallas area and with long ties to Southwest, may have some logistical advantages over Amadeus in the competition.

In addition to the res system agreement to implement SabreSonic Customer Sales and Service, Virgin America will also use the Sabre AirCentre Operations system for flight operations and crew scheduling.

The res system, flight operations and crew scheduling products will replace offerings from SITA and IBS.

Virgin America says the integrated reservations system from Sabre will position the airline to increase its revenue streams, including those from interlining and codeshare partnerships.

Virgin America also recently joined ARC so it can transition to e-ticketing, a move that would also bolster its interlining plans.

A Virgin America spokeswoman says the operations system would transition to Sabre in September 2011, with the res system migration scheduled to take place in November 2011.

The reservations system deal is another big win for Sabre, following recent agreements over the past couple of years to power WestJet, JetBlue,  TRIP Linhas Aéreas and others. In May 2010, British Airways agreed to use a Sabre solution for airport customer handling.

Virgin America has participated in the Sabre GDS since the airline launched in 2007.

The multiyear GDS renewal agreement gives travel agents hooked up to the Sabre GDS access to Virgin America’s fares and ancillary services, the companies say.

Travelport broke the news in a Securities and Exchange Commission filing, explaining that United notified Travelport Dec. 16 that the airline intends to terminate their contract for Apollo reservations-system services on March 1, 2012. The contract was due to expire in 2013.

Travelport said it expects United, which merged with Continental on Oct. 1, will consolidate its internal reservations system within the system that Continental uses.

Continental currently uses the HP SHARES reservations system.

However, United informed employees of the decision in an internal bulletin Dec. 21.

United told employees it will use SHARES for “reservation, check-in and e-Commerce.”

United also stated it will use United systems for flight operations, Continental systems for crew management, Orion, ARORA and SDO from United for revenue management and network operations, and a cargo vendor is still under review.

The airline said it based its technology systems decisions based on whether the vendor provides the best customer and employee experience and facilitates growth of the combined airline; whether the system is cost-effective and allows easy migration; and whether the system can be easily enhanced and accommodate changes to United’s business model.

Rashaan Johnson, a United spokesman, confirmed that the airline evaluated Apollo, SHARES and “several other options” and chose HP SHARES as the best customer and employee alternative and because its ability to handle a migration “in a reasonable amount of time.”

In the days when airlines commonly owned reservations systems and GDSs — then known as Computerized Reservations Systems or CRSs — United created the Apollo Reservations System in 1971.

The decision is a big win for HP, which provides reservations systems for numerous carriers and has a contract to build a new reservations system for American Airlines. American calls the new res system Jetstream and HP is marketing its next-generation res system as HP Agilaire Passenger Service Solution to other airlines.

United’s decision to transition to HP is a significant blow to both Travelport and Amadeus.

“It is expected that once United fully transitions off the Apollo system, which would be during the 2012 fiscal year at the earliest, it may adversely affect our results of operations due to the loss of fees resulting from this agreement, unless such revenue can be regained through the sale of other services to United or other carriers,” Travelport said.

Travelport said it expects to feel the financial impact of United’s decision in 2012 at the earliest.

United is among Travelport’s largest customers in North America and as late as April 2010, Travelport was stating publicly that it didn’t expect United to transition to a different reservations system.

United’s decision to transition its internal reservations system to HP could conceivably lead to a legal wrangle with Amadeus.

In 2005, United signed a contract to transition its internal reservations system from Apollo to the Amadeus Altéa solution, but the migration never happened.

Amadeus is taking the stance that its reservations system contract with United remains in effect.

Henry Harteveldt, Forrester Research’s principal travel analyst, says United decided to transition to HP out of technology, cost and control concerns.

United would be HP’s largest airline customer and would be able to have considerable influence into improvements in the SHARES system and the development direction of the Agilaire system, Harteveldt says.

Even before HP acquired EDS, which operated the SHARES system, EDS had been making system improvements, he adds.

Harteveldt considers United’s decision an interim step as it works to get through the merger.

“I think this is step 1 of a multi-step process,” Harteveldt says. “This is an interim solution. I don’t think in five or six years this is where we will see United Airlines.”

In other words, Harteveldt argues that in the future the merged United Airlines, with Continental in the fold, will reassess its overall technology needs and decide whether it would remain with HP.

The news came out of the airline’s Investor Day.

For the past two decades the airline has been using a reservations system known as SAAS, but a Southwest spokeswoman says the system has not been able to accommodate changes that Southwest wants to make.

“A new res system will help support, for example, codeshare; international travel; and easier reaccomodation capabilities, etc.,: the spokeswoman says.

Southwest indicated it does not have a timeline on when it will make a decision on which of the two vendors to pick.

Amadeus doesn’t have a reservations system partner in the US so winning Southwest would be a major win.

Amadeus’ signed a contract several years ago to build a reservations system for United Airlines but implementation never happened, although the contract remains in place. United backed off out of financial concerns.

Sabre has been making inroads with its SabreSonic reservations system in North America with implementations with JetBlue and WestJet, although Sabre lost out to HP, which picked up a contract to create a new reservations system for American Airlines.

Southwest is the largest domestic carrier in the US and its reservations system contract would be a prize for Sabre or Amadeus.

On the tech front, Southwest chairman and CEO Gary Kelly said the airline is committed to replacing its reservations system, a TPF solution which Sabre supports for programming and HP for data center services.

Kelly, speaking during a conference call about the acquisition, said Southwest has narrowed the choice of replacement vendors to two companies, and that a migration would enable international service in a couple of years.

A Southwest spokeswoman declined to identify the contenders.

AirTran is hosted on the Navitaire New Skies platform so Southwest would have to mull migrating to Navitaire or putting both airlines on a new system.

Reservations system providers in the running may include Sabre, Amadeus, ITA Software, Navitaire, HP, Travelport and others.

About a year ago, in October 2009, ITA Software began powering airfare shopping and pricing on Southwest.com so perhaps the relationship may expand.

An ITA Software spokeswoman had no comment on that scenario.

The Southwest-AirTran merger also could have distribution implications.

“AirTran is in more GDSs than Southwest and also participates in the online travel agencies,” says Henry Harteveldt, chief airline and travel analyst for Forrester Research.

Southwest eschews OTA distribution in favor of its Southwest.com-direct strategy, and Harteveldt says he expects after integration that Southwest would pull AirTran flights out of the OTAs.

“My expectation is that Southwest will have AirTran exit the OTAs at some point between the merger being approved by stockholders and consolidating the two airlines’ inventory, availability, and pricing onto whatever platform they will use, even if that is an interim move prior to selecting a new res system,” Harteveldt says.

Kelly said Southwest, the largest U.S. domestic airline, is not contemplating keeping AirTran as a separate brand in the long term.

He said Southwest will seeks to learn from AirTran, but doesn’t contemplate abandoning signature Southwest customer service policies such as Bags Fly Free for first and second checked bags.

Kelly said Southwest has the right to change its mind after the merger, with a closing expected early in 2011, but does not envision continuing AirTran’s practices of charging for bags, dual-class service or assigning seats.

“We are confident in what we are doing,” Kelly said, referring to Southwest’s brand and customer service strategies.

The acquisition is subject to regulatory approvals.

Under the terms of the deal, AirTran cannot solicit other acquisition offers, but can contemplate them if another entity makes an unsolicited bid. Southwest would have the right to respond.

The deal would help Southwest expand in Atlanta, a key market, and jumpstart Southwest’s desire to launch international service, particularly in the Caribbean.

The airline and HP concluded a formal agreement in March to have HP develop Jetstream.

Tnooz also reported at the time that American had an option to walk away from the contract within 90 or 120 days from the contact’s signing.

Asked today whether the airline had exercised the out clause, American spokesman Billy Sanez said the airline has “passed that time period” and is “going along the path with HP.”

Sanez declined to provide further details.

In 2008, HP acquired EDS for $13.9 billion, and now operates the EDS SHARES airline reservations system, used by several airlines, including Continental.

The former EDS is now part of HP Enterprise Services.

American currently uses SabreSonic as its reservations system.

Jetstream is billed as HP’s successor to SHARES and American would eventually transition from Sabre to Jetstream.

Virgin Blue’s New Skies internal reservations system from Navitaire reportedly crashed for several hours June 18, causing flight delays and disruptions at Australian airports, according to several reports.

Service has been restored, according to the Sydney Morning Herald.

The outage was a highly embarassing one as the airline distributed a press release two days earlier saying the $8.7 million [$AUS10 million] migration to New Skies had been “completed over two days of the June long-weekend,” ushering in “a whole new class of online service.”

Prior to the outage, the airline’s chief financial officer, Keith Neate, said: “The cutover to New Skies proceeded according to plan. We had a continengent of customer service agents in place at all major Australian domestic airports and I’m really proud to say the cutover was very successful with minimal or no delays to our network or guests.”

That statement turned out to be premature.

Virgin Blue is transitioning from one Navitaire platform to another.

The Australian airline previously had used Navitaire’s Open Skies platform.

The New Skies system, which experienced the shutdown, uses a ticketless model, where funds are tied to a customer record and not an individual ticket.

Among the new features, according to Virgin Blue, customers can compare fares up to 15 days surrounding the day they travel; they can book car rentals and hotels; and they can access booking summaries to better track costs.

The new platform also hosts Pacific Blue and Polynesian Blue.

Migrating from one airline reservations system to another can be a gut-wrenching process.

WestJet experienced much disruption last year when it migrated its internal reservations system from Navitaire to SabreSonic.

The deal sees BA use a product from Sabre Airline Solutions known as Qik Develop Tool which will allow airport employees to gather information about booked passengers and assist with terminal-to-aircraft workflow.

In short: rather helpful technology, it appears, to handle the multi-channel/platform systems now used by both people on the ground as well as customers.

Qik is already used by Lufthansa, South Africa Airways, Air New Zealand, Southwest Airlines and Thai Airways.

Kicking about behind the scenes, however, is Amadeus.

British Airways uses the Amadeus Altea Reservation and Inventory system as well as other technology to handle the airline’s existing Departure Control process.

The partnership, which has been in place as part of a wider IT agreement signed in March 2008 for ten years, will also see BA migrate its Departure Control and customer management technology to the Altea system.

Confused about how the Sabre system fits in, then?

It turns out that being developed alongside the existing Altea system is additional technology, namely the Qik system, to run “airport and ramp interfaces” – in other words: the passenger recognition system.

For its part, Sabre says:

“Sabre Qik Solution is one of many solutions we have developed to help airlines increase productivity, reduce costs and increase revenues. We are pleased that we can drive significant incremental value above what the airline uses today. It’s such flexible technology that it will adapt to any reservations system to create a custom point of sale and service for airlines.”

Amadeus adds:

“This agreement is the continuation of the strategic arrangement which started in 2000 between the two companies, designed to provide British Airways with a next generation technology platform for the management of passenger services.”

Who ever said technology simplifies the travel industry…

Some passengers have called into question the airline’s practice of hiking up prices of empty seats on flights despite thousands of passengers remaining overseas and still unsure as to when they can get home.

It turns out that the BA reservation system used to sell and allocate seats is to blame, forcing the airline to use a convoluted process to ensure it can re-assign places to stranded customers in places as widespread as Antigua/St Kitts, Hong Kong, Bangkok, Dubai, Delhi, The Maldives, New York and Sharm el Sheikh.

BA is unable to remove available seats from the system and hand them out to those stuck around the world.

This is because it has agreements with various intermediaries – namely, travel agents in the business and leisure sector and other airlines – to keep empty seats open on the system.

To get around this the airline has simply put up the price of each seat to (hopefully) put off agents from re-selling the fare.

A BA official is unable to confirm how much tickets were raised, but says it was “substantial”. Reports have suggested some fares were increased to as high as £4,700.

The airline has denied the inevitable accusations of profiteering.

An official continues:

This was the only technical solution we had available to us to help rebook as many of our own customers as we possibly could onto each flight.

But fearing a PR backlash – on top of the countless other problems the airline has faced in recent months – chief executive Willie Walsh even posted a video to YouTube last night to explain the issue.

httpv://www.youtube.com/watch?v=zWG363xt9DY

Who and what are you (including personnel and backgrounds)?

We are BookingBug an online booking/reservation/affiliate engine created by Glenn Shoosmith and Greg Bock. BookingBug is designed to help any kind of small service business from diving classes to B&B’s get their time and availability online and in front of more clients. Shoosmith’s background is in writing low latency financial transaction software and Bock comes from high-profile multimedia design and e-learning.

What financial support did you have to launch the business?

BookingBug is to date completely bootstrapped with both Glenn and Greg working on a contract and freelance basis to support the development of the product. This has been combined with the usual support of friends and family special note to Glenn’s father for his hard work and investment into the company.

What problem are you trying to solve?

We are trying to solve time online. Physical Goods are represented very well in the digital space. So well in fact that there is an entire business model based around the affiliate promotion of products and certain online storefronts. In services this is different however in that unless the service is an airline or hotel chain your typical SME has been left with very few real options to get his services in front of potential customers.

We also know the more steps the customer has to go through; the more likely they are to abandon the process. The sooner you can answer the question of ‘are you free when I want you’, the more likely you are to get business from that customers.

Finally we are also trying to make it easier for businesses to take payments online for their services. This may be just a deposit, or it could be the full amount, but reducing now-shows or last minute cancellations is vital for a lot of very small businesses.

Describe the business, core products and services?

To start, BookingBug is a robust booking and reservation system. BookingBug can handle businesses from a personal business owner offering a single service, all the way up to an enterprise level business with multiple locations, resources, and staff combined to offer a range of services, for hour, day or week based services, or even classes, courses and events.

It can allow these businesses to take enquires, accept a deposit for the service or payment. The system also allows for the idea of members, so a business can allow members to reserve their time without deposit or approval, but non members need to pay in advance. Prices can vary by time or day, and even complex prices such as 3-day or 4-day stays for cottages for at different prices for different times of year can be handled easily.

We help a business get that time in front of their customers, by offering customizable embedded widgets that can be added to any site. A business can embed multiple widgets, such that a holiday villa could have a booking widget for all of their villas on one page, and also have the availability of each villa on a page dedicated to each villa.

These can be customized for size and colour to fix seamless in the businesses site – all helping give the user a better experience and answering their most important questions quickly without them having to hunt around for the answer.

The depth and breadth of the types of businesses BookingBug can handle is what makes the second part of BookingBug possible.

BookingBug’s affiliate model is two-fold:

• Gives directory sites a new way to monetize their content as well as providing them a new source of real time content for their sites.
• Allows the businesses to get the real time availability of their services and resources in front of new potential customers.

The affiliates can charge the business on a couple of models, depending on service type and the businesses can choose to embed or not based on the value a particular directory provides. We have tailored business directories for a number of vertical markets, from B&B’s to experience sites who are building their site around integrating and offering BookingBug to their businesses.

Who are your key customers and users at launch?

Key customers at launch were any SMEs that were unsatisfied with the current online booking systems available, which are many. The SMEs we were interested were those that had not moved of a telephone and paper diary because the solutions out there were not flexible enough to fit their business needs.

The personal trainers that operated at many different locations, the small B&Bs that needed a cost effective solution for online room booking, and a lot of other small businesses that didn’t fit into the mould of 1 hour slots available 9-5.

Did you have customers validate your idea before investors?

We were kind of our own customers to start with. We were both frustrated with the lack of available service information online. Shoosmith was tired of phoning around to different councils just to find out that their squash courts were only available to members or simply unavailable on the day he was looking.

Wasting his time digging through websites that didn’t have a convenient way to display time and no way to keep it up to date. Shoosmith was frustrated that it was so difficult to collect money for services when it was so easy to so for products.

What is the business AND revenue model, strategy for profitability?

BookingBug has a simple software-as-a-service fremium model. There is a limited free version either as a taster, or for the smallest users. Payments plans start from only £10 per month, which significantly undercuts other less able booking systems.

If we take the transaction online, which we can do via Paypal, Google Checkout, or several merchant Accounts, we charge a 2% fee. There are also addition features such as receiving SMS’s when someone enquires, or sending SMS reminders to clients.

It is in the affiliate model however that things start to get interesting, as what BookingBug offers is revenue for 3rd party affiliate sites. These sites can earn for embedding booking widget on behalf of businesses and helping to bring them new customers.

The site can charge on a CPM basis, per booking or enquiry as a flat fee, or as a percentage of the service cost. We track which site bookings and enquires came from, charge the businesses as appropriate, and collate and pass the revenue on to the affiliate sites – creating a whole new revenue stream for destination sites that they will not have had before.

SWOT analysis – strengths, weaknesses, opportunities and threats?

BookingBug’s strength is in its ability to create value for businesses, consumers, and for destination affiliates sites. The opportunity lies in the way that other sites can build their business around our technology, offering value to the businesses they are working with and well as providing core content for their site.

The greatest threat is fragmentation of the market. At the moment BookingBug is the only significant broad reaching affiliate system for generic services (rather than hotels or restaurants specifically). Other entrants who come along behind us might attempt to fragment the market, which will lead to same problem where one site can only show you half of the picture of available services.

BookingBug is attempting to compensate for this by offering open API’s which can work with other platforms as they are developed to still allow a complete picture to be formed across multiple providers

Who advised you your idea isn’t going to be successful and why didn’t you listen to them?

Few people have said it wasn’t going to work, but some did raise the issue of converting people across from the traditional paper diary as a barrier for many small businesses.

We feel however that as e-commerce started as a niche idea with very few businesses taking it up, it has completely changed the way business operate, and now for a business not be able to sell or offer their good online is to miss a sizable chunk of your market. Businesses adapted to selling online because as their competitors did, it started to affect their bottom line.

The same will happen to service businesses in many areas. Those you cannot book or enquire about online will see a dip in sales compared to those whom you can.

A large driver for this change is the more ubiquitous availability of broadband internet. 5 or 10 years ago, a small business with either no internal access, or only a dial up line would not have wanted to manage their business online.

Now with broadband and smart phones, the ability to access your booking online from anywhere has value to a small business and the ability to show that availability in real time to your customers can only help increase your sales.

What is your success metric 12 months from now?

We have many different measures of success. Some of the partners we are working with now have the power to completely transform our business in many ways.

Within the next 12 months we would like to be in a position that we can help any small business integrate their live calendar into at least 6 different destination websites that are directly relevant to their business – the more sites they can integrate into, the more new customers they can access.

At that point we will start to see a snowball effect as more business see that value in getting their services online and in front of customers, and more 3rd party destination sites see that value on showing live service availability as way of adding value to their site and earning revenue from doing so.

TLabs Showcase is part of the wider TLabs project from Tnooz.

To be featured as a startup in TLabs Showcase or to demonstrate a new product, email Tnooz for more details.

The deal might be seen as a small measure of vindication for Sabre Airlines Solutions, which lost its status as American Airlines’ future reservations system provider to HP’s EDS unit.

So the tables are turned. AeroMexico currently uses HP/EDS as its internal-reservations system provider and will transition to Sabre.

However, American Airlines is a much larger airline than AeroMexico.

Officials say a transition to SabreSonic will help AeroMexico with its growth plans, including interlining and codeshares within partners, including fellow Sky Team members.

AeroMexico already had been using SabreSonic Web to power the airline’s website.

In addition to plans to implement SabreSonic, the airline contracted for several revenue management and accounting solutions from the Sabre AirVision Marketing and Planning suite.

In August, Sabre Airlines Solutions took a body blow when American Airlines revealed it intends to switch from its long-time reservations-system partner, Sabre, to a yet-to-be-built system, Jetstream, from HP/EDS.

But, apart from that setback, Sabre has been on a roll as it has implemented SabreSonic for new customers WestJet and JetBlue, and now has landed the AeroMexico contract, as well.

“Yes, the contract has been signed,” spokesman Billy Sanez says. “We are not sharing details, but, as you know, contracts take time.”

A spokeswoman for HP declined to comment.

AMR chairman and CEO Gerard Arpey created a bit of a stir Jan. 20 when he revealed that the two parties had yet to move beyond a letter of intent, which had been signed during the summer.

That fed speculation that perhaps the two companies were having difficulties coming to terms, or maybe the airline was having second thoughts and had decided it wasn’t ready to commit to such a massive project.

After all, in 2009, Air Canada withdrew from longstanding plans to have ITA Software build the the carrier a new reservations system, dubbed Polaris.

American Airlines currently uses Sabre to host the airline’s reservations system, and HP is tasked with the multiyear project to craft a new reservations system, called Jetstream, for American.

American Airlines is HP’s first customer for Jetstream, which HP describes as a next-generation passenger services system.

Amadeus’ Altea platform had been a contender for the American Airlines contract, but HP was the airline’s final choice.

Amadeus revealed today that it signed a memorandum of understanding with Asiana Airlines.

I reached out to Navitaire to get its take on JetBlue’s decision to convert to Sabre.

Until the transition, which began Jan. 29, JetBlue was using Navitaire’s Open Skies platform. Navitaire is transitioning its new airline customers to its New Skies system. The new platform uses a ticketless model, where funds are tied to a customer record and not an individual ticket.

Navitaire argues that ticketless New Skies is more efficient than the Sabre e-ticket model because New Skies has an integrated database, which circumvents the need to transfer data back and forth among multiple systems.

So, with little new development taking place for Open Skies, JetBlue opted for SabreSonic rather than transitioning to Navitaire’s New Skies.

Legacy Decision?

Navitaire believes legacy sensibilities played a role in JetBlue’s decision.

“Over the last two years, JetBlue has brought in all new management, creating a team that has primarily come from existing U.S. legacy carriers,” Navitaire says. “If they’ve only worked with and dealt in the legacy, traditional, IATA-bound world, it’s understandable that they would gravitate toward an industry e-ticket based solution that they are familiar with. In our experience, it’s hard for someone with a legacy airline background to truly understand the ticketless model, the cost benefits it delivers, and the flexibility that it enables.”

If economic concessions by Sabre drove JetBlue’s decision, Navitaire thinks they will be short-lived because of the alleged higher costs of operating the JetBlue-Sabre e-ticketing processes.

“With Sabre’s heavy reliance on GDS bookings, it’s in their best long-term interests to continue supporting the existing, old ways of business to drive more transactions and participation costs to their GDS side of the business,” Navitaire says. “They win on multiple fronts through improved/expanded content to agents, more agent and airline GDS transaction fees, more messaging fees from clients, etc. to line their coffers.”

For Navitaire, it’s all about the legacy world versus what it calls a “New World” approach, where airlines can be flexible and use hybrid models.

Navitaire speculates that Sabre doesn’t “have a New World-carrier ticketless product that’s positioned for the long run. If they did, American wouldn’t have opted to move away from Sabre” in favor of a new platform, Jetstream, to be provided by HP.

Misperceptions?

Speaking during JetBlue’s fourth quarter earnings call Jan. 28, a day before the cutover to Sabre, JetBlue President and CEO David Barger didn’t disparage Navitaire directly, but said the transition to Sabre would deliver a smorgasbord of new benefits.

“Transitioning to this new platform offers us the flexibility and robust tools to expand the products and services we offer our customers,” Barger said. “As a result, we believe the system will help improve the overall customer experience and further enhance the JetBlue brand. When fully implemented, the Sabre system will provide pricing flexibility that will enable us to attract more business customers, broaden ancillary revenue opportunities, and facilitate airline partnerships, all core initiatives for JetBlue.”

Navitaire believes that many in the industry have inaccurate, outdated perceptions of its products. In fact, the company says, it has 80 interline and code-share connections, ties to nine GDS platforms, a loyalty program and a travel commerce platform.

Codeshares

Navitaire says it supports codeshares on both Open Skies and New Skies. For example Virgin Blue, which is transitioning from Open Skies to New Skies, has bi-directional codeshares and interline agreements using Open Skies, Navitaire says. And, Jetstar, which had bi-directional codeshares and interline agreements through check-in on Open Skies, expanded them when it converted to New Skies last year, Navitaire says.

Navitaire points out that New Skies supports EDIFACT-compatible codeshares [Jetstar] as well as interline connections using APIs [TUIfly and Air Berlin].

Ancillary Revenue/Merchandising

Navitaire says its systems support a la carte ancillary services as well as bundled fares through New Skies and Navitaire’s Travel Commerce platform. Both systems, the company says, support locally hosted or externally connectioned inventory via APIs. Travel Commerce clients include Jetstar, Azul [founded by JetBlue founder and ex-CEO David Neeleman], Jazeera and Ryanair.

Navitaire concedes it is unaware of any comparisons of ancillary revenue functionalities — i.e. what can Sabre and others do versus Navitaire’s acumen– and adds, “It would be very interesting to see what is out there and get beyond the marketing promises into actual capabilities.”

“We’re certainly not in a position to comment on what Sabre can or cannot do, but based on JetBlue’s published information to passengers and agencies, it suggests there may be shortcomings given the JetBlue instructions to direct travelers and agents to contact the call center to book, change, manage or redeem various items,” Navitaire says. “Some of these require additional agency reporting outside of BSP/ARC.”

Pricing

Navitaire admits that Sabre has one advantage in that Sabre’s revenue management system supports O & D (Origin & Destination) forecasting and Navitaire’s SkyPrice revenue-management system does not. JetBlue had been using a revenue-management system from a third party, which does not support O & D, and presumably will be switching to Sabre’s.

Several of Navitaire’s airline customers use Sabre’s revenue management system, as well.

“We are developing our own O & D revenue management system and expect to build a better mousetrap,” Navitaire says.

Cutover Miscues?

Navitaire says it respects JetBlue’s decision to switch to Sabre and commends the airline for the work it did to make the transition.

“In the end, JetBlue faced a conversion off of Open Skies to either New Skies or one of our competitor’s reservation systems,” Navitaire says. “We would have obviously preferred a different outcome. We respect their decision and we have been honored to support their success over the past 10 years.”

Still, Navitaire points to alleged shortcomings in the reservations’ cutover, noting that many types of transactions — changes to existing reservations, credits and vouchers, agency credit shells, advance check-ins, TrueBlue redemptions and elements of new reservations — require call center support.

“This has got to be very costly,” Navitaire alleges. “This strongly suggests that the Sabre system is not customer centric, but transaction centric, and that the Sabre system (and e-tickets) was not able to accommodate several kinds of data that the seemingly ‘simple’ Open Skies system reservation-core stored and provided, with easy self-service customer access. It seems unusual that so many customer and PNR elements could not be converted in an accessible manner to enable self-service changes, Web check-in and customer credit, voucher and TrueBlue redemptions.”

JetBlue has been widely lauded — on Tnooz and elsewhere — for the transparency it has shown and the massive efforts it made to ensure a smooth transition in the switch to Sabre.

Whether some of the cutover problems that Navitaire points to are understandable bumps in the road or suggest lingering technology shortcomings, this remains to be seen.

Says Navitaire: “The Sabre marketing machinery can be quite prolific, but the track record to illustrate innovation and results isn’t always clear. Time will tell on promises versus results.”

Update

Au contraire, says Henry Harteveldt, Forrester Research’s principal analyst, airline and travel research.

Harteveldt says:

“Navitaire is correct that their ‘ticketless’ system may offer some efficiencies versus the Sabre e-ticketing system, but JetBlue’s decision to change was based on much more than that. In JetBlue’s assessment, NewSkies’ capabilities were clearly viewed as less robust than Sabre’s. The decision that JetBlue made had nothing to do with ‘comfort’ with network airline e-ticketing, but more to do with what Sabre could do in terms of helping JetBlue increase its revenue-generating capabilities compared to what New Skies was able to offer JetBlue.

“Navitaire also did not paint an accurate portrait of JetBlue’s ongoing customer service environment, either. Though it wasn’t ideal that JetBlue had to suspend some activities or conduct others only by phone during the cutover, doing so was a prudent business move given the complexity of the reservation system transition. JetBlue has been processing bookings on JetBlue.com for much of this week, as well as online check-in and supporting TrueBlue loyalty program account management. It is my understanding from JetBlue that other functions, including exchanges and refunds, will also be supported online.

“JetBlue is a more complex airline now than it was when it began 10 years ago. It is inevitable, in almost any business, that as a company grows and evolves — and becomes more complex as a result — that it requires different types of technology infrastructure to support the business. Sometimes the incumbent provider can provide that new infrastructure, and sometimes a new provider is deemed to have a better solution. JetBlue isn’t the only airline to have moved off Navitaire for Sabre. Both WestJet and Volaris either have done so or will be doing so. Even American Airlines, which literally created Sabre, is planning to move off Sabre onto the new Jetstream platform being developed by Hewlett-Packard.”

The airline, which is transitioning this weekend to SabreSonic as the host of the airline’s reservations system, had planned to take down the website at around noon on Friday and to bring it back up this afternoon.

Such reservations systems transitions are massive in scope, and from outward appearances, JetBlue was doing everything right — at least in terms of transparency to the customer.

There was a link at the top of the JetBlue.com homepage this afternoon for customers who may have been experiencing lingering website issues.

At about 2:15 p.m. EST today, JetBlue tweeted: “Track our Sabre cutover progress on our blog http://bit.ly/b9UCT2 How was your travel experience today? Let us know.”

On JetBlue’s B6 Blog, the airline says it started planning the switch around two years ago, and pointed to some of the actions it took to keep disruptions to a minimum.

“We have proactively pulled down 56 flights and capped the remaining flights at 40% load factors in the morning on Jan. 30 up to 60% load factors on Jan. 31. If a Customer misses his/her flight due to long check-in times, we are well positioned to get them on the next flight.”

A video on the blog had officials discussing the effort and precautions that went into the transition, with officials noting that the changeover is not a one- or two-day affair, and that it will probably take until around Presidents’ Day, Feb. 15, before the kinks are worked out.

I haven’t seem any immediate press reports about major disruptions.

As promised, JetBlue’s website, JetBlue.com, went quiet this afternoon as the airline transitions reservations-system providers from Navitaire to Sabre.

The homepage says: “JetBlue is currently transitioning to a new reservation system. As a result, all of our reservations and booking services will be unavailable from
12 p.m. ET on Friday, January 29 to Saturday afternoon, January 30.”

Hopefully, the transition will go relatively smoothly — there always are problems with such a major change — and JetBlue.com will be back up and running by Saturday evening.

The website advises travelers to expect long lines when checking-in and dropping off bags, and advises travelers to arrive at airports two hours early for domestic flights and three hours before international flights.

JetBlue reduced its flight schedules over the weekend in anticipation of the tech changes.

Also here’s a FAQ about all the things travelers can’t do during the outage.

In the short term, JetBlue.com will be down for a time over the weekend as JetBlue migrates customer records from Navitaire to Sabre. The airline also has reduced its schedules and load factors over the weekend, and has available an extra Verizon call center to handle customer calls if the disruption is significant.

During the airline’s earnings call for the fourth quarter, in which JetBlue posted an $11 million profit, officials said the installation of SabreSonic does not mean the airline will speedily implement a first-checked-bag fee, although it’s an option, but noted that it is indeed working on establishing onboard food sales, and sees selling vacation packages as a possibility.

The switch to Sabre will help JetBlue meet key objectives, officials said, namely pricing flexibility, bolstering ancillary revenue and establishing new partnerships, including codeshare and interline agreements.

Pointing to disruptions when WestJet transitioned to SabreSonic, JetBlue officials said any host-system conversion is challenging and that WestJet communicated with JetBlue about lessons learned. JetBlue employees have been training for the switchover for months.

JetBlue officials said the impact of the cutover to Sabre will be so far-reaching that it will affect revenue management, accounting and financial reporting.

The airline said it expects to incur $10 million in operating expenses related to the Sabre transition in the first quarter, and that new revenue opportunities will be back-end loaded and take a period of time to materialize.

In other news, JetBlue said it is considering moving its headquarters from New York to Orlando and will decide within 60 days.

A version of the TI Starfish platform is working behind the main CNTraveller site to provide a fully functioning search and booking facility for around 3,000 hotels around the world.

It replaces the old system which saw visitors sent away to the hotel’s own website in order to check availability and book a room.

The majority of hotels are located in Europe and feature in the four and five-star category range.

Josephs, who left Ebookers in the summer of 2009 for the CEO position at Travel Intelligence, says many of the hotels also feature content written by Conde Nast’s editorial team.

The commercial partnership is based on a revenue share against bookings made at each hotel.

Securing the CNTraveller brief for the Travel Intelligence Group, which includes the TravelIntelligence and Chic Retreats consumer-facing brands, will soften the blow of losing the Mr and Mrs Smith booking partnership in October 2009.

The switch to an online booking system for hotels comes as part of a wider relaunch of CNTraveller by its parent firm, Conde Nast Digital International, home to a string of well known consumer titles such as Vogue, Glamour, GQ and the UK version of Wired.